Daschle withdraws Cabinet nomination

WASHINGTON — Faced with problems over back taxes and potential conflicts of interest, Tom Daschle withdrew his nomination on Tuesday to be President Barack Obama's Health and Human Services secretary.

"Now we must move forward," Obama said in a written statement accepting Daschle's surprise request to be removed from consideration. A day earlier, Obama had said he "absolutely" stood by Daschle.

Daschle, the former Senate Democratic leader and a strong backer of Obama's presidential bid, said he would have been unable to operate "with the full faith of Congress and the American people."

"I am not that leader, and will not be a distraction" to Obama's agenda, he said.

His stunning statement came less than three hours after another Obama nominee also withdrew from consideration, and also over tax problems. Nancy Killefer, nominated by Obama to be the government's first chief performance officer, said she didn't want her bungling of payroll taxes on her household help to be a distraction.

Daschle was the third high-profile Obama nominee to bow out. Obama initially had tapped Bill Richardson to be Commerce secretary, but the New Mexico governor withdrew amid a grand jury investigation into a state contract awarded to his political donors.

"I was a little stunned. I thought he was going to get confirmed," said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, the panel that would have voted on Daschle's nomination. "It's regrettable. He's a very good man."

Obama, Vice President Joe Biden and Daschle's former Democratic colleagues had rallied to his defense in the wake of questions about his failure to fully pay his taxes from 2005 through 2007. Last month, Daschle paid $128,203 in back taxes and $11,964 in interest.

"Tom made a mistake, which he has openly acknowledged," Obama said. "He has not excused it, nor do I. But that mistake and this decision cannot diminish the many contributions Tom has made to this country."

Daschle also was facing questions about potential conflicts of interests related to the speaking fees he accepted from health care interests. Daschle also provided advice to health insurers and hospitals through his post-Senate work at a law firm.

It all proved too bitter a pill for senators to swallow, even for a former member of their club. Last week, the Senate confirmed Timothy Geithner as Treasury secretary despite his tax problems.

The controversy also has undercut Obama's promise to run a more ethical, responsible and special interest-free administration.